Rohit Kapur, New Delhi V. ACIT, Special Range-8, New Delhi

ITA 9016/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9828 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2016-2017
• Appeal Filed On: 20-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Salary income; Rule of consistency; Assessment record; Set aside
• Section: 10; 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F, NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.9016/DEL/2019 (ASSESSMENT YEAR-2016-17) SH. ROHIT KAPUR 3,THE GREEN RAJOKRI NEW DELHI-110038 PAN ASLPK 1411C VS. ADD. CIT, SPECIAL RANGE-8, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. S. KRISHANAN, ADV. RESPONDENT BY SH. M. BARNWAL, SR. DR DATE OF HEARING 27.05.2020 DATE OF PRONOUNCEMENT 01.07.2020 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST OR DER DATED 27.09.2019 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 8, NEW DELHI {CIT(A)} FOR ASSESSMENT YEAR: 2016-17. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE AS SESSEE IS THE WHOLE TIME MANAGING DIRECTOR OF M/S SELAN EXPLORATION TEC HNOLOGY LTD. DURING THE YEAR UNDER CONSIDERATION, APART FROM SAL ARY FROM THE 2 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT WHOLE-TIME DIRECTORSHIP OF THIS COMPANY, THE ASSESSE E HAS ALSO EARNED INTEREST AND INCOME FROM OTHER SOURCES WITHIN INDIA AND HE HAS ALSO DISCLOSED INCOME FROM SOURCES OUTSIDE INDI A IN THE NATURE OF INTEREST INCOME, RENTAL INCOME (LOSS) AND INCOME FR OM TRANSACTIONS IN FINANCIAL SECURITIES. THE ASSESSEE WAS ALSO THE OWNE R OF ONE UNIT IN TRUMP HOTEL, USA, ON WHICH HE INCURRED LOSS OF RS. 5 2,97,197/- AND CLAIMED THE SAID LOSS UNDER THE HEAD INCOME FROM O THER SOURCES AND SOUGHT TO SET OFF THE LOSS AGAINST THE SALARY INCOM E OF THE SAME YEAR. THE ASSESSEE ALSO CLAIMED LOSS FROM TWO LIMITED LIAB ILITY COMPANIES (LLC) IN THE USA OF RS.26,94,282/- AS DEDUCTION U/S 57 OF THE ACT, AS BUSINESS LOSS. HOWEVER, THE ASSESSING OFFICER (AO ) CONSIDERED THE LOSS OF RS.52,97,197/- FROM THE UNIT HELD IN TRUMP HOTEL, CLAIMED UNDER THE HEAD INCOME FROM OTHER SOURCES AS BUSINES S LOSS AND ALSO TREATED THE LOSS OF RS.26,94,282/- FROM THE LLCS C LAIMED UNDER THE HEAD OTHER SOURCES U/S 57 OF THE ACT AS BUSINESS LO SS. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.10,25,00 00/-. 2.1 AGGRIEVED, THE ASSESSEE APPROACH THE LD. FIRST APPELLATE AUTHORITY WHO DISMISSED THE ASSESSEES APPEAL AND NO W THE ASSESSEE 3 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT IS NOW BEFORE THIS TRIBUNAL AND HAS CHALLENGED THE O RDER OF THE LD. CIT (A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE FOLLO WING ACTIONS OF THE ASSESSING OFFICER: (I) IN ASSESSING LOSS FROM HOTEL UNIT AT HOTEL TRUMP INTERNATIONAL, NEW YORK, USA UNDER THE HEAD BUSINE SS LOSS AS AGAINST LOSS UNDER THE HEAD INCOME FROM O THER SOURCES DECLARED IN THE RETURN; (II) IN DETERMINING SHARE OF LOSS FROM LLCS (SITUATED IN USA) UNDER THE HEAD BUSINESS AS AGAINST LOSS UNDER IN COME FROM SOURCES DECLARED IN THE RETURN; (III) IN DENYING THE SET OFF OF LOSS SUFFERED FROM HOTEL UNIT IN USA AND ALSO LOSS FROM PARTNERSHIP IN LLCS AGAINST SALARY INCOME. ALL THE ABOVE ACTIONS BEING ARBITRARY, ERRONEOUS AN D UNJUST THE SAME MUST BE QUASHED WITH DIRECTIONS FOR APPROPRIAT E RELIEF . 3.0 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD MADE INVESTMENT IN ONE UNIT OF A PROPE RTY IN THE USA WHICH ALONG-WITH OTHER SUCH UNITS HAD BEEN DEVELOPED AS A HOTEL ENTITY BY SOME OTHER ENTREPRENEURS WHICH IS CALLED HOTEL TRUMP INTERNATIONAL. THE ARRANGEMENT FOR INVESTMENT WAS T HAT THE ASSESSEE WOULD BE ALLOTTED A UNIT IN THAT COMPLEX WHICH ALONG WITH SEVERAL OTHER SIMILAR UNITS (TOTAL NUMBER 160) BELONGING TO A HUGE NUMBER OF 4 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT OTHERS WOULD BE DEVELOPED, OPERATED, MAINTAINED AND RUN PROFESSIONALLY AS A HOTEL. PERIODICALLY, THE NET IN COME OF THE HOTEL WAS DIVIDED AND DEFRAYED TO THE UNIT OWNERS BY THAT ENTE RPRISE THERE IN THE USA WHICH WAS OPERATING THE HOTEL. THE LD. AR SUBMITT ED THAT THE ASSESSEEE HAD NEITHER ANY CONTROL OF ANY SORT OVER THE PROPERTY CONSTITUTING THE UNITS NOR DID THE ASSESSEE HAVE AN Y SAY OR ROLE IN THE MANAGEMENT OF THE HOTEL. IT WAS EMPHASIZED BY THE LD . AR THAT IN FACT NONE OF THE UNIT HOLDERS SUBSCRIBING TO THE HOTEL P ROPERTY HAD ANY SUCH SAY OR ROLE IN THE CONDUCT OF THE HOTEL OPERAT IONS. 3.1 IT WAS ARGUED BY THE LD. AR THAT THE PURPOSE OF PUTTING MONEY IN ONE UNIT IN THE COMPLEX COMPRISING 160 UNI TS BY THE ASSESSEE WAS SOLELY AND WHOLLY FOR INVESTMENT PURPOSE S. IT WAS SUBMITTED THAT THE ASSESSEE COULD NEVER HAD DONE AN Y BUSINESS THERE FOR SEVERAL REASONS. THE FIRST OF IT WAS THAT HE WAS A WHOLE-TIME DIRECTOR OF THE COMPANY IN INDIA THAT FORBADE HIM F ROM ENGAGING IN ANY OTHER ACTIVITY ELSEWHERE. SECONDLY, THE HOTEL BU SINESS WAS LOCATED IN USA OUT OF INDIA AND THE ASSESSEE COULD NOT BE T HERE AT ALL DUE TO THE EXIGENCIES OF HIS EMPLOYMENT IN INDIA. THIRDLY, IT WAS SUBMITTED, THE ASSESEEE WAS THE OWNER OF ONLY A FRACTION OF THE HOTEL PROPERTY I.E. 5 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT 1/160 AND THE REST OF THE PROPERTY WAS OWNED BY SEVER AL OTHER PERSONS OVER WHOM THE ASSESSEE WOULD, UNDERSTANDABLY , HAVE NO SAY. IT WAS SUBMITTED THAT THE ASSESSEE HAD NO RELATIONS HIP WITH THE DISPARATE OWNERS OF OTHER UNITS OR EVEN WITH THAT ENT REPRENEUR IN USA WHO WAS RUNNING THE HOTEL OPERATIONS. 3.2 IT WAS SUBMITTED BY THE LD. AR THAT THE FIN DINGS OF THE ASSESSING OFFICER, AS RECORDED IN PARA 3.3, ARE ALL ERRONEOUS AND ARE WHOLLY UNTENABLE BECAUSE BUSINESS, AS UNDERSTOOD UND ER THE ACT, COMPRISES OF A SYSTEMATIC AND ORGANIZED ACTIVITY DO NE REPETITIVELY WITH THE PURPOSE OF EARNING INCOME AND THE ENTREPRENEUR ASSUMES A PRO- ACTIVE ROLE IN THE CONDUCT OF BUSINESS ACTIVITY. IT WAS ARGUED THAT PASSIVE DISPOSITION IS CONTRARY TO THE ENTERPRISE I N BUSINESS. THE LD. AR SUBMITTED THAT AN IMPORTANT FACTOR TO DETERMINE WHETHER A TRANSACTION IS BUSINESS OR INVESTMENT IS THE INITIA L INTENTION OF THE ASSESSEE WHILE DEPLOYING FUNDS IN THAT PARTICULAR PU RSUIT AND IN THIS PARTICULAR CASE, THE ASSESSEE KNOWING FULLY-WELL THA T HE WAS THE OWNER OF ONLY ONE OUT OF 160 UNITS AND THAT HE COULD NOT IN ANY CIRCUMSTANCE MANAGE THE HOTEL OPERATIONS BOTH DUE T O THE SIZE OF HIS HOLDING IN THE BUSINESS OF HOTEL AND HIS SERVICE CO MMITMENTS IN INDIA 6 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT ENTAILING HIS STAY IN INDIA AND HIS DESISTING FROM ENGAGING IN OTHER ACTIVITY, HE HAD PAID THE MONEY AS FOR INVESTMENT. IT WAS SUBMITTED THAT THERE IS NOTHING BROUGHT ON RECORD BY THE ASSE SSING OFFICER TO DISPEL THAT VIEW AND THAT THE ACTIVITY OF THE ASSES SEE DOES NOT FALL IN THE PORTAL OF BUSINESS. IT WAS ARGUED THAT THE PRE-D OMINANT FACT IN THE SUBJECT CASE IS THAT THIS ASSESSEE HAS INVESTED FOR ONE UNIT IN A COMPLEX OF 160 UNITS AND HE HAS DONE SO WHOLLY AND S OLELY AS AN INVESTMENT OUT OF HIS OWN SURPLUS FUNDS, THE ASSESSI NG OFFICERS ACTION IN TREATING THE INCOME AS BUSINESS IS THUS PER SE WRONG. IT WAS PLEADED THAT THE INCOME AS RETURNED UNDER 'OTHER SO URCES IS CORRECTLY AND PROPERLY DONE FOR IT ARISES OUT OF INVESTMENTS AND SO IT WAS PLEADED THAT THE SAME MAY KINDLY BE DIRECTED TO BE ACCEPTED AND ADOPTED FOR ASSESSMENT PURPOSES BY THE ASSESSING OF FICER. 4.0 WITH REFERENCE TO THE SECOND DISPUTE IN THIS A PPEAL PERTAINING TO A LOSS OF RS. 19.26 LAKHS FROM TWO LLC S, THE LD AR SUBMITTED THAT THESE ARE LOSSES WHICH HAVE BEEN IN CURRED IN TERMS OF THE RETURNS, FIRSTLY, FROM SOUTH BOARD INVESTORS LL C AND, SECONDLY, FROM 10 GREENE OWNERS LLC. BOTH THESE OUTLAYS WERE ES SENTIALLY ON ACCOUNT OF INVESTMENTS MADE IN USA BY THE ASSESSEE FOR THE PURPOSE 7 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT OF SUPPLEMENTING HIS INCOME FROM OTHER SOURCES. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS TREATED THE NEGATIVE RETURN FROM THESE TWO OUTLAYS AS BUSINESS LOSS SO AS TO DENY THE BENEF IT OF SET OFF AS CLAIMED. IT WAS SUBMITTED THAT NOT ONLY DUE TO THE L OCATIONAL DIFFERENCES, BUT ALSO DUE TO THE OCCUPATIONAL LIMIT ATIONS, THE ASSESSEE COULD NOT HAVE DONE ANY BUSINESS. IT WAS SUBMITTED T HAT THE OUTLAYS IN THE TWO CITED VENTURES WERE ONLY FOR THE PURPOSE OF EARNING INVESTMENT INCOME OVER AND ABOVE THE REGULAR SALARY INCOME EARNED IN INDIA. IT WAS ARGUED THAT THE INTENTION WAS, AND A LWAYS HAS BEEN, TO MAKE SUCH OUTLAYS IN USA WHICH WOULD FETCH RETURNS WITHOUT ANY FURTHER ACT OR DEED ON THE PART OF THE ASSESSEE. TH E LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO APPRECIATE THAT IN THE CASE OF OUTLAYS OF THIS NATURE, IT IS IMPORTANT TO DETERMIN E AS TO WHETHER THE INVESTMENT ACT LIES IN THE REALM OF BUSINESS OR NOT AND IN SO DOING, THE INTENTION OF THE ASSESSEE IS OF CARDINAL IMPORT ANCE. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS AT NO POIN T OF TIME ESTABLISHED THAT INTENTION OF THE ASSESSEE WAS TO EA RN OUT OF BUSINESS. IT WAS SUBMITTED THAT THE ACTION OF THE ASSESSING OF FICER IS THUS TOTALLY FALLACIOUS AND DEVOID OF MERIT PARTICULARLY IN THE LIGHT OF THE FACT THAT 8 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT IN THE PRECEDING YEARS INVESTMENTS OF THIS NATURE H AVE CONSISTENTLY NOT BEEN TREATED AS BUSINESS IN THE ASSESSMENTS. 4.1 THE LD. AUTHORIZED REPRESENTATIVE FURTHER SU BMITTED THAT THE LOWER AUTHORITIES HAVE ERRED IN NOT ABIDIN G BY THE PRINCIPLE OF CONSISTENCY ALSO AS THE ASSESSMENT RECORDS OF THE A SSESSEE WOULD REVEAL THAT THE INCOME EARNED FROM INVESTMENT ACTIV ITY HAS ALWAYS BEEN CONSIDERED AS INVESTMENT INCOME BUT IN THE YEA R UNDER CONSIDERATION THE ASSESSING OFFICER HAS REVISED HIS OPINION TO TREAT SUCH INCOME AS INCOME FROM BUSINESS ACTIVITY WHICH I S AGAINST THE PRINCIPLE OF CONSISTENCY. IT WAS ALSO SUBMITTED THAT ONUS WAS ON THE REVENUE TO PROVE THAT THE INCOME WAS FROM BUSINESS A CTIVITIES AND NOT FROM OTHER SOURCES. 5.0 IN RESPONSE, THE LD. SR. DR APPEARING ON BEHA LF OF THE DEPARTMENT SUBMITTED THAT THERE IS NO RES JUDICATA IN INCOME TAX LAW AND, THEREFORE, THE CLOCK CAN BE RE-SET TO GIVE A C ORRECT TREATMENT TO THE INCOME EARNED BY THE ASSESSEE. IT WAS ALSO SUBMI TTED THAT THE EARLIER ASSESSMENTS MADE U/S 143(3) OF THE ACT WERE LIMITED SCRUTINY ASSESSMENTS AND THE ISSUES IN THE PRESENT APPEAL WE RE NOT LOOKED INTO AT THAT POINT OF TIME. THE LD. SR. DR PLACED E XTENSIVE RELIANCE ON 9 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT THE FINDINGS OF BOTH THE LOWER AUTHORITIES AND VEHE MENTLY ARGUED THAT THE ORDER OF THE LD. CIT (A) BE UPHELD. 6.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD AND THE TWO QUESTION S ARISING FOR CONSIDERATION BY US ARE: (I) WHETHER THE LOWER AUTH ORITIES WERE CORRECT IN ASSESSING LOSS FROM A HOTEL UNIT AT HOTEL TRUMP INTERNATIONAL, NEW YORK (USA) UNDER THE HEAD BUSINESS LOSS AS AGAINS T LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES AS CLAIMED BY THE ASSESSEE; AND (II) WHETHER THE LOWER AUTHORITIES WERE CORRECT IN DETERM INING THE SHARE OF LOSS FROM LIMITED LIABILITY COMPANIES (CONSTITUTED IN USA) UNDER THE HEAD BUSINESS LOSS AS AGAINST THE LOSS UNDER INCOME FROM OTHER SOURCES AS CLAIMED BY THE ASSESSEE. 6.1 THE FACTS LEADING TO THE FIRST CONTROVERSY ARE THAT THE ASSESSEE HAD PURCHASED AND IS THE OWNER OF ONE UNIT IN THE TRUMP HOTEL INTERNATIONAL IN NEW YORK (USA). THIS PROPERT Y WAS ACQUIRED WHEN THE ASSESSEE WAS A NON-RESIDENT INDIAN AND WAS E MPLOYED IN THE USA. THE ASSESSEE HAS ENTERED INTO HOTEL MAINTE NANCE AND OPERATION AGREEMENT IN RESPECT OF THE HOTEL UNIT OWN ED BY HIM AND UNDER THIS AGREEMENT HOTEL UNIT IS OPERATED AS A PA RT OF THE HOTEL BY 10 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT AN APPOINTED MANAGING COMPANY. THE ASSESSEES UNIT, ALONG WITH OTHER UNITS IS PROVIDED TO THE HOTEL GUESTS FOR BOA RDING AND LODGING FACILITY, BOOKINGS FOR WHICH CAN BE DONE THROUGH VAR IOUS TRAVELS AGENTS, WEBSITE ETC. UNDER THE SAID AGREEMENT, THE HOTEL COLLECTS TARIFF FROM THE GUESTS STAYING IN THE ROOMS AND THE OPERAT ING EXPENSES ARE PROPORTIONATELY REALIZED. THE HOTEL CLAIMS REIMBURS EMENT OF REAL ESTATE TAXES ETC. FROM THE ASSESSEE ALONG WITH OTHER UNIT HOLDERS. SUBSEQUENTLY, THE SURPLUS OR DEFICIT FROM THE TRANS ACTIONS IS TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE AND THE ASSESSEE IS PROVIDED PERIODICAL DETAILS OF REVENUE AND EXPENSES IN RESPECT OF THIS UNIT. IT IS SEEN THAT THE ASSESSEE HAS BEEN OFFERIN G SUCH INCOME TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES AND, UND ISPUTEDLY, THIS INCOME WAS ACCEPTED AS INCOME FROM OTHER SOURCES IN EARLIER ASSESSMENT YEARS I.E., 2014-15 & 2015-16. IT IS ALS O A CASE ON THE POINT THAT THE TRUMP HOTEL INTERNATIONAL MAKES PAYM ENT TO THE ASSESSEE TOWARDS RENT OF THE UNIT AND THE ASSESSEE I S DEBITED FOR THE USE OF FURNITURE, FIXTURE, TOILETRIES, FINANCIAL AD MINISTRATION AND ACCOUNTING CHARGES, USE OF STAFF TO COLLECT ROOMS R ENTALS, STAFF FOR MONITORING AND COLLECTING CHARGES SUCH AS CABLE TEL EVISION, TELEPHONE 11 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT AND ROOMS SERVICES CHARGES ETC. THUS, EVIDENTLY, TH E REVENUE IS BEING GENERATED FOR EACH HOTEL UNIT WITHOUT THE ACTIVE PAR TICIPATION OF THE UNIT OWNERS. 6.2 THE HONBLE APEX COURT IN THE CASE OF SULTAN B ROTHERS (PVT.) LTD. VS. CIT REPORTED IN [1964] 51 ITR 353 (SC) WAS CONSIDERING AN ISSUE TO DECIDE THE APPROPRIATE HEAD FOR TAXING THE INCOME I.E., WHETHER THE INCOME WAS COVERED UNDER INCOME FROM BUSI NESS OR PROFESSION OR INCOME FROM OTHER SOURCES. IN THIS CA SE, THE ASSESSEE HAD CONSTRUCTED A BUILDING FULLY FURNISHED AND HAD LET OUT THE SAME TO ANOTHER PERSON FOR USE AS A HOTEL. THE ASSESSEE NEVER CARRIED ON THE BUSINESS OF THE HOTEL IN THE PREMISES LET OUT A ND THERE WAS NOTHING TO SHOW THAT IT INTENDED TO CARRY ON THE HOT EL BUSINESS ITSELF. THE BUILDING AND THE FURNITURE AND PLANTS ETC. WERE ALL LET OUT FOR RUNNING THE HOTEL AND WERE INSEPARABLE FROM EACH OT HER. THE HONBLE APEX COURT HELD THAT THE INCOME WAS TO BE ASSESSED A S INCOME FROM OTHER SOURCES. IN THE PRESENT CASE, IT IS EVIDENT FROM THE CONDUCT OF THE ASSESSEE THAT THE ASSESSEE WAS NOT INTENDING TO RUN A UNIT IN TRUMP HOTEL INTERNATIONAL HIMSELF BUT RATHER HE HAD PURCHASED THE UNIT WHILE HE WAS EMPLOYED WITH AN OIL EXPLORATION COM PANY IN USA 12 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT AND HE HAS GIVEN THIS UNIT FOR BEING RUN UNDER THE HOTEL OPERATIONS AND MAINTENANCE AGREEMENT TO BE RUN BY THE MANAGIN G COMPANY. THUS, AT NO POINT OF TIME HAS THE ASSESSEE EVER BEE N ENGAGED IN RUNNING THE HOTEL UNIT ON HIS OWN. IT IS ALSO EVIDE NT THAT THE CONTROL OF THE AFFAIRS OF THE ASSESSEES UNIT LIKE TO WHOM T HE UNIT IS TO BE LET OUT, WHAT KIND AMENITIES ARE TO BE PROVIDED WITHIN TH E UNIT, WHAT TARIFF HAS TO BE CHARGED FROM THE UNIT ETC. ARE BEY OND THE CONTROL AND DECISION MAKING POWERS OF THE ASSESSEE. THUS, FOR A LL PRACTICAL PURPOSES, THE UNIT UNDER CONSIDERATION CANNOT BE CO NSIDERED TO BE A BUSINESS UNDERTAKING OF THE ASSESSEE. ADMITTEDLY A ND UNDISPUTEDLY, THE DEPARTMENT HAS ALSO ACCEPTED THIS POSITION IN T HE PRECEDING TWO ASSESSMENT YEARS. ALTHOUGH THE PRINCIPLE OF RES JUDICATA DOES NOT STRICTLY APPLY TO INCOME TAX PROCEEDINGS, ALL THE S AME, THE HONBLE APEX COURT IN THE CASE OF RADHA SOAMI SATSANG VS. C IT, 193 ITR 32 (SC) HAS HELD THAT THE REVENUE CANNOT DISTURB AND ALTER ISSUES WHICH HAVE ALREADY BEEN SETTLED IN PREVIOUS YEARS IF THER E IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES. ACCORDINGLY, WE ARE UNABLE TO ACCEPT THE VIEW TAKEN BY THE LD. CIT (A) AND WE SET ASIDE HIS FI NDING ON THE ISSUE 13 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT AND DIRECT THE ASSESSING OFFICER TO TREAT THE LOSS FROM THE UNIT IN TRUMP HOTEL INTERNATIONAL UNDER INCOME FROM OTHER SOURCES. 7.0 AS FAR AS SUCH SECOND ISSUE OF DETERMINING THE HEAD OF INCOME FOR SHARE OF LOSS FROM LLCS SITUATED IN THE USA IS CONCERNED, IT IS SEEN THAT THE ASSESSEE HAD MADE INVESTMENT IN TWO LIMITED LIABILITY COMPANIES IN THE USA NAMELY SOUTH BROAD I NVESTORS (LLC) AND 10-GREEN ONUS (LLC) AND THE ASSESSEE HAD SHOWN L OSS OF RS.26,94,282/- FROM THESE TWO LLCS UNDER THE HEAD I NCOME FROM OTHER SOURCES. THE ASSESSING OFFICER WAS OF THE OPIN ION THAT THE ASSESSEE WAS DOING BUSINESS AS PARTNER IN THE LLCS A ND, THEREFORE, THE RESULTANT INCOME OR LOSS WAS TO BE BOOKED UNDER THE HEAD BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES . ON THIS ISSUE ALSO IT IS UNDISPUTED FACT THAT THE LOSSES IN ASSES SMENT YEARS 2014-15 & 2015-16 HAD BEEN ACCEPTED BY THE ASSESSING OFFICE R UNDER INCOME FROM OTHER SOURCES. FURTHER, ON THE FACTS OF THE CA SE, IT IS OUR CONSIDERED OPINION THAT THE ASSESSEE, BY VIRTUE OF BEING THE WHOLE TIME EMPLOYEE DIRECTOR IN AN OIL EXPLORATION COMPAN Y, COULD NOT HAVE MADE THE CAPITAL OUTLAY IN THE TWO LIMITED LIABILITI ES COMPANY FOR THE PURPOSE OF BUSINESS AND, APPARENTLY, THIS WAS ONLY F OR THE PURPOSE OF 14 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT AN INVESTMENT. HOWEVER, THE ASSESSING OFFICER SEEMS TO HAVE OVERLOOKED THIS FACTOR. THE ASSESSING OFFICER AS SO MEHOW FAILED TO APPRECIATE THAT IN THE CASE OF OUTLAYS OF THIS NATU RE, IT IS IMPORTANT TO DETERMINE AS TO WHETHER THE INVESTMENT WAS IN THE REA LM OF BUSINESS OR NOT. THE ASSESSING OFFICER HAS AT NO POINT OF TI ME ESTABLISHED THAT THE INTENTION OF THE ASSESSEE WAS TO EARN OUT OF BU SINESS. THE ASSESSING OFFICER ALSO HAS CHOSEN TO IGNORE THE FAC T THAT IN THE PRECEDING ASSESSMENT YEARS, THE INVESTMENT OF THIS NATURE HAVE CONSISTENTLY HAVE NOT BEEN TREATED AS BUSINESS. THE REFORE, EVEN ON THE GROUND OF CONSISTENCY, THE IMPUGNED LOSS SHOULD HAV E BEEN TREATED AS LOSS UNDER OTHER SOURCES. ALSO IT IS WELL-SETTLED TH AT THE ONUS IS ON THE REVENUE TO PROVE THAT THE PARTICULAR TIME OF INCOME OR LOSS IS FROM BUSINESS. HOWEVER, IN THE PRESENT CASE SUCH A FINDI NG BY THE ASSESSING OFFICER IS ENTIRELY ABSENT. ACCORDINGLY, THERE IS NO FOUNDATION FOR THE ASSESSING OFFICER TO HAVE TREATE D THE IMPUGNED LOSS AS BUSINESS LOSS AND WE HAVE NO OPTION BUT TO DISAG REE WITH THE FINDINGS OF THE LD. CIT (A). ACCORDINGLY, WE SET ASI DE HIS ORDER ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO TREAT THE IMPUGNED LOSS AS LOSS UNDER INCOME FROM OTHER SOURCES. 15 ITA NO.9016/DEL/2019 S H. ROHIT KAPUR VS. ACIT 8.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 01/07/2020. SD/- SD/- (G.S.PANNU) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEM BER DATED:01/07/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI